Treasurys rally as investors bid up safety

Market absorbs 30-year bond auction

NEW YORK (MarketWatch) — Treasury prices surged as stocks sold off Thursday, pushing yields sharply lower as the market digested a more dovish stance from the Federal Reserve.

The 10-year Treasury note
US:10_YEAR
yield, which falls as prices rise, was down 4 basis points at 2.648%. The benchmark note has been trading within a yield range between 2.60% and 2.80% for most of the year thus far.

“It’s a stroll down safe-haven lane,” said Jonathan Lewis, chief investment officer at Samson Capital Advisors. “He added: I think the equity market is highlighting that the fixed-income market is a place you want to stay fully invested in.”

Treasury investors have been trying to decipher when the Federal Reserve will act to hike its near-zero fed funds rate, which central bankers have said depends on improvement in the economy.

“The market turned around on that yesterday and really never looked back,” said Thomas Roth, director of government trading at Mitsubishi UFJ Securities U.S.A. Inc.

The Treasury Department sold $13 billion in 30-year bonds Thursday at a yield of 3.525%, part of a $64 billion trio of sales this week that included 3-year notes and 10-year notes. Bidders offered to buy 2.52 times the amount of debt for sales, compared with an average of 2.39 times in the last six sales.

Greece sells first long-term bond since bailout

(3:12)

Greece offered longer-term bonds for the first time in four years and is expected to raise €3 billion ($4.14 billion) after attracting more than €20 billion of demand, according to bankers working on the deal. Photo: AP

Indirect bidders, which often include foreign central banks, took down 43.3% of the sale, compared with 41.9% in recent auctions. Direct bidders, which often include U.S. asset managers, bought 17.9%, compared with 16.2% in recent sales.

“The results were decent in light of today’s rally with stats that were, on average, very close to the four re-opening averages,” said William O’Donnell, head Treasury strategist at RBS, in a note.

Data on Thursday showed jobless claims dropped by 32,000 last week to a seasonally adjusted reading of 300,000, nearly the lowest in seven years. Economists polled by MarketWatch had expected 320,000. Following a cold winter that has been blamed for subdued economic activity, the jobless claims data could be taken as a sign of a spring rebound.

A report on nonfarm payrolls last week delivered a reading of 192,000 new jobs created in March, nearly matching economist expectations, but falling well below ramped up market expectations.

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